going on DMP - should we sell house?

Nivea_2

Hi DFW's,

I am a serial lurker, but have finally found the courage to join.

My story is as follows:

I have always been terrible with money, CC on the go, a loan etc, also bailed out with re- mortgages. 3 years ago I had no debts and a good salary and I find myself today £45k in debt with nothing to show for it, I am ashamed and mortified that I have got myself into this mess. My husband had no idea (married 12 years, he has no debts), I read every post on here I could find about telling your partner about debts, it was eating me away and I was constantly worried and anxious, couldn't sleep. Everytime DH mentioned money to me I would panic. So after months of worry I wrote him a letter telling him everything and he was fantastic, not angry at all, gutted mostly. I have told him everything and have contacted CCCS and I am about to enter a DMP.

I earn £44,500 a year, good money I know, take home is £2,666. On my DMP I will be paying £746 a month a it will take me 4 years and 9 months to pay off if interest is stopped. I am absolutley crapping myself about going on a DMP.

I have been thinking, we have around £50k equity in the house and if I am debt free then I can save money again (I get an annual bonus of around £8k a year after tax every Feb), so saving my bonus plus £1,000 a month I will have £80,000 saved in 6 years. Would you do this? would you sell your house now to clear all your debts knowing that in 6 years time you could have £80,000 to get back onto the property ladder? I have looked at posts on here and the advice is varied, some say don't do it - never sell to pay debts and others say its the bestthing they ever did.

We also need to move, our house is too small but if I am on a DMP it won't happen and I have realised we could afford to rent a house for £1,000 a month if we are debt free and still save £1,000 per month.

I don't know what to do.....

Any advice?

xx

Gimpsdad

Only you can decide what to do, but provided your repayment amount is something that you can stick to, and providing CCCS manage to get interest frozen, and the odds are pretty good on that I would say, then less than 5 years isn't a great deal of time. Your bonus could be used to achieve short settlement of debts which will reduce the timescal in your favour as well, so it does seem a bit extreme to sell up in my opinion, but it is your life.

Time_to_face_the_music

Nivea wrote: »

Hi DFW's,

I am a serial lurker, but have finally found the courage to join.

My story is as follows:

I have always been terrible with money, CC on the go, a loan etc, also bailed out with re- mortgages. 3 years ago I had no debts and a good salary and I find myself today £45k in debt with nothing to show for it, I am ashamed and mortified that I have got myself into this mess. My husband had no idea (married 12 years, he has no debts), I read every post on here I could find about telling your partner about debts, it was eating me away and I was constantly worried and anxious, couldn't sleep. Everytime DH mentioned money to me I would panic. So after months of worry I wrote him a letter telling him everything and he was fantastic, not angry at all, gutted mostly. I have told him everything and have contacted CCCS and I am about to enter a DMP.

I earn £44,500 a year, good money I know, take home is £2,666. On my DMP I will be paying £746 a month a it will take me 4 years and 9 months to pay off if interest is stopped. I am absolutley crapping myself about going on a DMP.

I have been thinking, we have around £50k equity in the house and if I am debt free then I can save money again (I get an annual bonus of around £8k a year after tax every Feb), so saving my bonus plus £1,000 a month I will have £80,000 saved in 6 years. Would you do this? would you sell your house now to clear all your debts knowing that in 6 years time you could have £80,000 to get back onto the property ladder? I have looked at posts on here and the advice is varied, some say don't do it - never sell to pay debts and others say its the bestthing they ever did.

We also need to move, our house is too small but if I am on a DMP it won't happen and I have realised we could afford to rent a house for £1,000 a month if we are debt free and still save £1,000 per month.

I don't know what to do.....

Any advice?

xx

Hi Nivea

How much is your current mortgage per month?
Do you live in an area where your house is likely to sell quickly and at the price you want?
Is your OH contributing towards your DMP or are you going it alone?
Could you possibly pay more than £746 per month towards the DMP?
Have you counted putting your annual bonus towards your DMP?

Sorry for all the questions but your figures are a bit confusing at the moment.

Well done on sharing this with your OH, you must feel like a massive weight has been taken off your shoulders :T

eyeopener2

Hey!

Don't panic as someone oncce said.

Four years and 9 months is not long really, certainly not to long to throw away your home.

Every month that goes past you learn how to live within your means and when that glourious debt free day comes you will have £700+ and a lovely bonus to look forward to. You will have addressed whatever caused the debt, hopefully, and you will be free.

if your getting an £8k bonus every year (pre or pst tax?) then that an be thrown at your debt, unless its included in the DMP, I doubt that though, and that ccould bring your DFD even closer.

Get on with paying your debts and forget selling your home for now. Or can you honestly say you will save the money and buy again in 6 years? A DMP is a wonderful thing to make you budget and really think about money.

You'll be fine, it's just a bit scary at first. One your up and running it's fine. Trust me and look at my signature! £24k debt originally and I pay nearly £600 on a £1600 take home, it's working and I thought the original 4 years was a long way off, now i'm down to approx 16 months.

Honestly, things will work out.

E2

gizmo111

Out of the equit you have to take the selling costs and the cost of deposits etc which after these are paid you won't have the full amount of equity, in the next 6 years you can pay a chunk of your mortgage if it is repayment and avoid the buying and seling costs. Also you will bein private rented and not have the security you could be moving every six months.
I wouldn't sell - but it is entirely your decision

Nivea_2

Time_to_face_the_music wrote: »

Hi Nivea

How much is your current mortgage per month?
Do you live in an area where your house is likely to sell quickly and at the price you want?
Is your OH contributing towards your DMP or are you going it alone?
Could you possibly pay more than £746 per month towards the DMP?
Have you counted putting your annual bonus towards your DMP?

Sorry for all the questions but your figures are a bit confusing at the moment.

Well done on sharing this with your OH, you must feel like a massive weight has been taken off your shoulders :T

Thank you for responding to me, the support on this board is amazing

In response to your questions:

How much is your current mortgage per month? - £561 a month
Do you live in an area where your house is likely to sell quickly and at the price you want? - it will actually, close to town and station so lots of people are buying to rent (3 bed house)
Is your OH contributing towards your DMP or are you going it alone? - not he isn't, whilst he has been fab in understanding my mess I don't want him to contribute, this is problem and I am going to sort it out
Could you possibly pay more than £746 per month towards the DMP? - i could, i budgeted well but also ensured i had a bit left over to save, i want to review it again in 6 months to see if i can pay more, also i am paying back £296 a month to a family loan which will finish in 12 months so i can then add that to the dmp as i won't miss it as paying it out now
Have you counted putting your annual bonus towards your DMP? - i haven't, and the £8,000 is post tax (£13,00 pre tax) so I am willing to put that in the pot too.

Nivea_2

eyeopener2 wrote: »

Hey!

Don't panic as someone oncce said.

Four years and 9 months is not long really, certainly not to long to throw away your home.

Every month that goes past you learn how to live within your means and when that glourious debt free day comes you will have £700+ and a lovely bonus to look forward to. You will have addressed whatever caused the debt, hopefully, and you will be free.

if your getting an £8k bonus every year (pre or pst tax?) then that an be thrown at your debt, unless its included in the DMP, I doubt that though, and that ccould bring your DFD even closer.

Get on with paying your debts and forget selling your home for now. Or can you honestly say you will save the money and buy again in 6 years? A DMP is a wonderful thing to make you budget and really think about money.

You'll be fine, it's just a bit scary at first. One your up and running it's fine. Trust me and look at my signature! £24k debt originally and I pay nearly £600 on a £1600 take home, it's working and I thought the original 4 years was a long way off, now i'm down to approx 16 months.

Honestly, things will work out.

E2

You are inspriational, you have really tackled your debts and its fantastic you are so close to the finishing line - well done
I didn't include bonus, I getit every Feb and the £8k ispost tax, have discussed with DH and decided I will put it all towards the debts, if I do that twice thats £16k off the the lot what with my monthly payments of £746 i am hoping we will be back on track in 4 years time.

Nivea_2

gizmo111 wrote: »

Out of the equit you have to take the selling costs and the cost of deposits etc which after these are paid you won't have the full amount of equity, in the next 6 years you can pay a chunk of your mortgage if it is repayment and avoid the buying and seling costs. Also you will bein private rented and not have the security you could be moving every six months.
I wouldn't sell - but it is entirely your decision

Thank you for your advice, seeing the posts here I think I am inclined to agree that my DMP is strong, I have my bonus and I could be debt free is 4 years which is very lucky, I am luck to have a good salary and a very understanding husband!

Chrisblue1962

Hi Nivea

As a fellow DMP'er who has 16, yes you did read that right, 16 years to go on my DMP, I personally think your best bet would be to stay put for now and pay off your debt first before moving to another home.

• If you sell, you will invariably move into rented accomodation which means four years of paying money to somebody else rather than your mortgage.
• Despite the recession, house prices invariably only do one thing in the long term...go up. At least by staying put and continuing to pay the mortgage, think of it as purchasing an asset not paying a debt.
• If you enter a DMP, the interest will be frozen so over the four years so no futher overall costs over time.
• I appreciate that you may end up with defaults on your credit record but in time they will dissapear.

Good Luck on your DMP journey if you decide this is the way forward but the excellent thing is that YOU are now in control of your situation and your debts.. brilliant.. well done for being brave :T

Hatecreditors.com

I'm in a DMP and have absolutely no equity in my house. If I had enough Equity in my house to pay off all my debts I would do it in a heartbeat.

Having said that, you say you have been down the re mortgaging route which I assume was to pay off old debt so it would appear that the consolidation method failed (most consolidation loans fail).

The choice is yours but please be aware that your creditors are highly likely to issue defaults which will affect your ability to apply for a new mortgage for 6 years.

And as for previous posters advising that creditors will freeze interest this is not 100% guaranteed. 50% of my creditors still charge interest and won't budge. This is a nominal 1% per month. If your creditors insist on 1% a month your interest will be £450 per month.

Time_to_face_the_music

Nivea wrote: »

Thank you for responding to me, the support on this board is amazing

In response to your questions:

How much is your current mortgage per month? - £561 a month
Do you live in an area where your house is likely to sell quickly and at the price you want? - it will actually, close to town and station so lots of people are buying to rent (3 bed house)
Is your OH contributing towards your DMP or are you going it alone? - not he isn't, whilst he has been fab in understanding my mess I don't want him to contribute, this is problem and I am going to sort it out
Could you possibly pay more than £746 per month towards the DMP? - i could, i budgeted well but also ensured i had a bit left over to save, i want to review it again in 6 months to see if i can pay more, also i am paying back £296 a month to a family loan which will finish in 12 months so i can then add that to the dmp as i won't miss it as paying it out now
Have you counted putting your annual bonus towards your DMP? - i haven't, and the £8,000 is post tax (£13,00 pre tax) so I am willing to put that in the pot too.

Stay in your house and throw every penny you can at the DMP. If your creditors all stop interest, it's a big if but it's the way CCCS do their calculations so let's go for it, you can pay your debt off in 33 months and have £4000 of your last bonus left to start your savings.

You said earlier that if you sold your house, you could pay £1000 rent and save £1000 a month so think about if you could possibly put more towards your DMP than the £746 you have currently budgeted for?

We pay about £1800 per month towards our DMP. Our debt is a lot higher than yours and the payment is from 2 salaries but both are considerably lower than yours. We want to throw every penny we can at our debt and unfortunately not all of our creditors have stopped interest. Even though it's against CCCS guidelines, any spare money each month is paid off one debt which is still at full interest. When that one is paid, we will do the same at the next.

You can do this and do it a lot faster than you originally thought. I can already see that light shining at the end of your tunnel :T

Oh and please come and join us on the DMP support thread - part 8, if you like support, you will love it there